01 Sep Tips for Teaching Your Children Financial Literacy
Your child learns everything from you, so it comes to no surprise when they mimic your every move. However, now is the time to set the right example and be best role model you can for your child. If you start teaching a child good habits early on, they are more likely to continue following them for the rest of their lives. A great habit is by teaching your child the do’s and don’ts of finance. The following are some tips for teaching your child financial literacy.
A Want And A Need
We understand the difference between a want and a need, the problem is understanding that in a financial sense. We all WANT things but we have to ask ourselves, do we NEED them? It is better to teach a child early on that wanting and needing mean two different things. A good way to try and explain it would be by setting an example. For instance, you have to pay for food, schooling, bills, and medicine before you can spend money on a vacation or buy clothes. This is helping a child comprehend that a need comes before a want.
What Is Credit?
An easy way to explain credit to a child is that you are borrowing from someone, but when you do it comes at a cost. At the end of the day, credit can be a very useful feature in life. However, credit needs to be handled maturely and responsibly as it can still cause damage to a bank account. Children need to learn not to abuse the power of credit as it is a privilege to have.
Saving money is very vital in life. One of the easier ways to begin to instill this process of savings with your child is through the use of a piggy bank! With this idea, you can explain to your child that they can’t open the piggy bank until it is filled to the brim with coins and cash. This shows them that over the course of time, the more they save the more their money will grow.
With money can come dilemmas. Many of us have experienced a financial setback or ran into an issue with a payment. That is common. Your child should know that it is normal for this to occur a few times within their lifetime. Handling money needs to be taken seriously, so if your child misses a credit card or car payment in the future, it needs to be understood that there are consequences. Making a mistake or two will help them learn that it is imperative to be on time with payments.
Money is a complex concept but needs to be understood by everyone, including children. If you take the proper steps of explaining money to your child now, it will put them on a better financial path later. We are here to lend a helping hand! If you have any questions or regards in how to teach your child financial literacy please don’t hesitate to contact us for more information.